Most Americans view the Middle East as a region covered in sand, camels, and oil wells — and dominated by Saudi Arabia. But a couple of intriguing stories lately dispute the common stereotypes.
First, United Arab Emirates government-owned investment firm Mubadala Development Company is buying a 7.5% stake in The Carlyle Group, a US investment firm that owns stakes in Freescale, Dunkin’ Donuts, Water Pik, and about 200 other companies.
Second, the Qatar Investment Authority, a Qatari government-owned investment group, has acquired a 20% stake in the London Stock Exchange. Not to be outdone, the Borse Dubai has acquired Nasdaq’s 28% stake in the LSE and took a nearly 20% stake in Nasdaq itself.
If you are like me, your first response is something that’s been described as “economic patriotism.” How dare “they” buy one of “our” financial institutions. What are their ulterior motives? What do they mean by this?!
Well, I think we can safely say that “they” are hoping to make a boatload of money off these deals. That’s pretty much why any investment firm is in business. But in the case of the stock exchange deal, the question is, will a foreign government end up with undue influence over world markets? Qatar apparently hopes to swipe Dubai’s mantle as the financial capital of the region, so yes, clearly the move is less about money than it is about influence.
Which means that economic patriotism is not so unjustified a reaction after all — that is, if any Middle Eastern government is the automatic “other” whose interests automatically run counter to our own. Remember the outrage over the Dubai ports deal? So far there hasn’t been the same outcry by politicians and media. But the underlying unease — economic patriotism — will likely linger. I’ve gone back and forth in my own opinions regarding these two stories even while writing this post.
I’d like to say that a deal is a deal and it’s not political, it’s just business. And yet … I’d love to hear your reactions.
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